KUALA LUMPUR (May 21): UMW Holdings Bhd registered a 17% rise in net profit to RM86.50 million in its first quarter of the financial year 2019 (1QFY19), from RM74.08 million a year ago, as revenue climbed on stronger contributions from all three of its core business segments.

Revenue for the three months ended March 31, 2019 (1QFY19) rose 15% to RM2.77 billion from RM2.42 billion, driven primarily by its automotive segment, where revenue grew 15% to RM2.16 billion, from RM1.88 billion on higher vehicle sales.

It also registered improved sales in its heavy equipment business, which boosted its equipment segment revenue by 3% to RM382.8 million from RM373.0 million previously, while its manufacturing and engineering (M&E) segment achieved a 41% topline growth to RM237.1 million from RM168.5 million, on higher fan cases delivery to Rolls-Royce and better sales in the auto components business.

However, UMW said in a statement today that its profit before taxation (PBT) from continuing operations narrowed to RM140.7 million in 1QFY19 from RM154.3 million a year ago, due to higher depreciation attributable to the new Bukit Raja plant, coupled with lower margin in its equipment segment.

Nevertheless, its consolidated 1QFY19 net profit improved as losses from its unlisted oil and gas (O&G) segment were significantly reduced, as consolidated PBT rose to RM140.5 million from RM123.6 million year-on-year from the significantly narrowed loss before taxation (LBT) of RM100,000 in its discontinued operations, compared to an LBT of RM30.7 million previously.

Going forward, the group expects the introduction of fresh and exciting models from its new automotive assembly plant and lower borrowing costs for consumers as a result of the reduction in overnight policy rate, to boost vehicle sales.

"We will continue to strengthen our presence in the automotive market, especially with our new state-of-the-art assembly plant. Since commercial production began in January, we have introduced the all-new Toyota Vios and Toyota Yaris with high local content to be more competitive in the market," said UMW president and group chief executive officer, Badrul Feisal Abdul Rahim.  

Badrul Feisal also said the revival of major infrastructure projects is expected to spark optimism in its equipment segment, as demand increases. 

"In the M&E segment, KYB-UMW will commence its plant modernisation activities to meet increasing demand, while we continue to ramp-up production of fan cases for Rolls-Royce. We also see potential to explore and penetrate more markets in ASEAN for our very own Grantt brand of lubricants," he added.

Meanwhile, the group is embarking on cost optimisation initiatives to improve business performance and operational productivity. "All in, the group is on a firm path to deliver sustainable value to our shareholders,” added Badrul Feisal, despite a business environment that remains "challenging".

UMW shares closed unchanged at RM5.45 today, giving it a market capitalisation of RM6.37 billion. Year to date, the stock is little changed from when it was trading at RM5.47 a share at end-2018.